Heating cost comparison

The new Heat Planning Act obliges municipalities to carry out heat planning by mid-2028 at the latest, thus creating a concrete basis for implementing the decarbonization of the heating sector. At the same time, the Building Energy Act restricts the selection of heating options permitted in the future to options based on renewable energies. Although binding heat planning is a duty of the body responsible for planning, operators of the energy supply and heating networks (e.g. municipal utilities) should also be involved in the process. The cost calculation presented in this article is also integrated into the FfE heat transformation tool and is therefore a further building block for prioritizing supply solutions in municipal heat planning. The respective heating costs are an important decision criterion, particularly when deciding in which areas heating networks should be created in the future and where a decentralized heat supply might be more suitable. Alternative methods for prioritizing heat supply options have already been investigated by FfE in other projects (e.g. Future Strategy for District Heating).

In order to compare the different types of heat supply on the basis of economic feasibility analysis, different cost parameters must be taken into account. The total costs are made up of capital costs and operating costs, which are further divided demand-depending (energy carrier) costs and operating costs of maintenance and repair. To this end, FfE has developed a tool for the simple comparison of supply options for different building types and refurbishment statuses. This method was tested together with Stadtwerke Augsburg and an industrial partner. The parameters can be easily adapted and tailored to a new application depending on individual requirements and special features.

Input data for the heating cost comparison

Up-to-date and validated input data is very important for a realistic cost comparison. Data has been obtained and validated by FfE from various projects with local authorities, municipal utilities, and industrial partners. The relevant input parameters for a heating cost comparison include:

  • Building-specific information for common building types: specific heating requirements for different KfW EH refurbishment standards, living space, full refurbishment costs and energy-related additional costs
  • Energy source prices (electricity, natural gas, wood pellets, hydrogen, biogas) and their projections for the observation period
  • Cost functions for investments in heat generators or for district heating connection technology, their sevice life, capacity factors and maintenance and repair costs (e.g. based on [1])
  • Design parameters of the heating options
  • Current subsidy conditions, e.g. [2]
  • District heating connection costs and price composition incl. basic charge and energy fee (individually depending on the producer park and other price-forming factors)

The procedure of comparing heating costs using these inputs is described in more detail below.

Configuration and implementation of the heating cost comparison

Reference building and refurbishment measures

Various reference buildings can be considered for the comparison of costs, e.g. single-family houses (SFH), terraced houses (TH), small or large multi-family houses (MFH). For these housing types, the FfE has the typical heat demands and the conditioned floor areas  from projects that have already been implemented. In addition to the unrenovated reference states, various refurbishment packages to different KfW EH standards can also be considered. In addition to the heat demands resulting from the refurbishment measures, the refurbishment costs (full costs or energy-related additional costs of the refurbishment) are also relevant here. The building specifics can thus be used to determine the building heat demand, the building heating load and corresponding refurbishment costs. The latter are included in the profitability comparison as annuity costs to take into account the service life of such long-term measures.

Selection of heating systems and mapping of the relevant investment costs

The heating loads of the buildings under consideration and the technology-specific cost factors are required for calculating the investment costs of the heat generators. The required heating load is determined using the building and refurbishment parameters already described. The investment costs are calculated using validated technology-specific cost functions.

Almost all decentralized supply options can be considered here. The focus is generally on heating options that will be permitted in the future in accordance with the Building Energy Act, such as electric heat pumps, biomass heating or solar thermal systems. Fossil fuel options could still be considered as a reference solution.

For hybrid options, the requirements of the Building Energy Act (GEG) are taken into account. In addition to the investment costs of the heat generators, other necessary system components, such as borehole heat exchangers, well systems or pellet stores, are also considered.

Energy source prices

Based on the heating systems under consideration, the relevant energy sources must be considered. In order not to neglect the effects of future energy price developments, the end customer prices should be considered over a longer period. An observation period of approx. 20 years can be selected for the service life of new heating systems. However, depending on the use case (see below), a shorter observation period of five years, for example, can also be selected.

The price time series of the energy sources under consideration for the observation period originate from internal FfE forecasts and assumptions made by other relevant institutions (e.g. C.A.R.M.E.N [3]).

Comparison of total annual costs

To compare the various heat supply options, the following cost components were determined in accordance with VDI 2067 Sheet 1 [4] and considered when calculating the total annual costs:

  • Capital-related costs,
  • Demand-related costs and
  • Operating costs.

To determine the capital-related costs, the investment costs of the respective heat generators, the necessary additional components, any connection costs incurred, and the costs of the selected renovation depth are first determined. Existing investment subsidies for both the heat generators and the refurbishment are taken into account. The capital-related costs result from the investments converted into annual costs. These annuities are calculated using the service life and a calculation interest rate. Individual service lives are applied for the heat generators in accordance with VDI 2067-1. For the amortization period of the refurbishment, 40 years can be used as an example.

The operating costs include the costs for maintenance and operation. These include maintenance, inspection, cleaning, repair and elimination of weak points. They are included in the calculation for each variant at a flat annual percentage of the investment costs. These are average values over the entire service life of the components and not the actual annual costs incurred.

The demand-related costs consist of the fuel and energy prices, which in turn are made up of basic/fixed charges, connection and energy fees, depending on the energy source. No costs for auxiliary energy or operating materials are included in the calculations. The annual demand-related costs are calculated using the assumed energy source prices and the respective final energy demand.

Heating cost comparison for Stadtwerke Augsburg

In the specific use case for Stadtwerke Augsburg, a SFH, a TH and a large MFH were considered for different refurbishment standards (unrefurbished, KfW EH 70, KfW EH 40). The following heating systems were considered and compared with an existing and new district heating system:

  • Groundwater heat pump (GW)
  • Air heat pump (AW)
  • Pellet boiler
  • Hybrid heat pump (GW with gas boiler)
  • Hybrid heat pump (AW with gas boiler)
  • Hybrid solar thermal with pellet boiler.

The relevant comparative costs for district heating were provided by Stadtwerke Augsburg in the form of basic charge and energy fees as well as connection costs. The connection costs are only to be considered for new district heating customers. An observation period of five years was defined in the project. Figure 1 shows an example of the methodology adapted to the project.

Figure 1: Overview of the scope and methodology of the comparison of different heating systems in the project with Stadtwerke Augsburg

The sum of the various cost components results in the total annual costs of the individual heat supply options. Figure 2 shows the specific results of the project presented for the apartment building.

Figure 2: Cost comparison for an apartment building (MFH)

Figure 2 can be used to compare the costs of the heat supply options under consideration in order to determine the most economically feasible option in each case. The effects of different refurbishment measures are represented by the different colors, while the considered cost components are differentiated by the type of shading. In this specific case, the capital-related refurbishment costs (based on the reference building) are shown separately, as these are incurred equally for all options.

The complete comparison is available online.

A heating cost comparison for your application?

Do you also need a detailed and graphically illustrated comparison of specific supply options for your application? Please contact our experts below to discuss the individual framework conditions.

The tool allows you to easily adjust the assumptions and thus tailor them to your use case, allowing you to draw direct conclusions for your business model, price calculations or on-site heat planning.

More Information



[1] Technikkatalog zur kommunalen Wärmeplanung. In https://www.kea-bw.de/waermewende/wissensportal/kommunale-waermeplanung/einfuehrung-in-den-technikkatalog. (Abruf am 2024-05-02); Karlsruhe: KEA Klimaschutz- und Energieagentur Baden-Württemberg GmbH (KEA-BW), 2024.

[2] Richtlinie für die Bundesförderung für effiziente Gebäude – Einzelmaßnahmen (BEG EM). Berlin: Bundesministerium für Wirtschaft und Klimaschutz, 2023.

[3] Marktpreise Pellets – Preisentwicklung bei Holzpellets. In https://www.carmen-ev.de/service/marktueberblick/marktpreise-energieholz/marktpreise-pellets/. (Abruf am 2024-03-26); Straubing: C.A.R.M.E.N. e.V. – Centrales Agrar-Rohstoff Marketing- und Energie-Netzwerk e.V., 2024.

[4] VDI 2067 – Blatt 1 – Wirtschaftlichkeit gebäudetechnischer Anlagen – Grundlagen und Kostenberechnung . Ausgefertigt am 2000, Version vom 2012-09; Düsseldorf: Verein Deutscher Ingenieure (VDI), 2012.